U.S. Targets Russia's Largest Bank in New Sanctions Over Ukraine

Sanctions also affect Russia's oil and defense industries, joining similar EU sanctions which went into effect on Friday.

Bill Trott

12.09.2014 | 17:35

REUTERS - The United States announced more sanctions against Russia on Friday, affecting oil and defense industries and further limiting the access of major Russian banks to U.S. debt and equity markets to punish Russia for its intervention in Ukraine.

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The sanctions, which for the first time targeted Russia's Sberbank, were timed to coincide with new European Union economic penalties that included restrictions on financing for some Russian state-owned companies and asset freezes on leading Russian politicians.

The sanctions could be rolled back if Moscow withdrew its forces from Ukraine and established a buffer zone along the border among other conditions, a senior U.S. official said.

The U.S. Treasury Department said the sanctions include a ban on U.S. individuals or companies dealing with Rostec, a major Russian technology and defense conglomerate, in debt transactions of more than 30 days maturity.

The new U.S. sanctions tighten the financial noose on six Russian banks, including Sberbank, Russia's largest by assets, by barring U.S. individuals and companies from dealing in any debt they issue of longer than 30 days maturity.

The five banks previously covered had only faced a restriction on debt maturities of more than 90 days. Like those five, Sberbank now also faces a ban on U.S. equity financing.

The Treasury Department also imposed sanctions prohibiting U.S. individuals and companies from dealing in new debt of greater than 90 days maturity issued by Russian energy companies Gazprom Neft and Transneft.

"These steps underscore the continued resolve of the international community against Russia's aggression," U.S. Treasury Secretary Jack Lew said in a statement. "Russia's economic and diplomatic isolation will continue to grow as long as its actions do not live up to its words."

President Vladimir Putin said the new Western sanctions against Russia were intended to disrupt peace efforts in eastern Ukraine and that Moscow was considering retaliatory measures.

Speaking to journalists after a meeting of the Shanghai Cooperation Organization security bloc, Putin said the sanctions looked "a bit strange" in view of the peace drive including a ceasefire.

"When the situation is moving towards a peaceful resolution, steps are taken which are aimed at disrupting of the peace process," said Putin in Dushanbe, capital of the former Soviet republic of Tajikistan in Central Asia.

"We've long been convinced that sanctions as an instrument of foreign policy are inefficient and practically never bring about their desired result - even in relation to small countries. Of course a policy of sanctions inflicts certain damage, including to those who use them."